"One of the most compelling investments in retail": what the Walmart report will show investors

Walmart, the largest retail chain in the United States, will release its results for the last quarter on Thursday. Analysts expect high results from the company, but are not sure that it will improve its forecasts. Market participants will wait for the reports and comments from Walmart's management to assess the impact of trade duties and price increases on consumer demand. Investors expect a lot from Walmart, and any signs of weakness may turn into a fall in the stock, Barron's warned.

Walmart will report its second quarter earnings on Thursday, August 21, before U.S. trading opens.

Analysts polled by LSEG expect Walmart's earnings per share to grow more than 10% year-over-year, CNBC reports. And revenue, according to consensus expectations, will increase by 4% year-over-year.

Analysts largely remained optimistic about the retailer ahead of the report's release, even though the stock has outperformed since the start of the year, rising 13.5% since the beginning of January, while the S&P 500 index has added less than 9%.

"Walmart remains one of the most compelling investments in retail as the company continues to carry all the momentum despite a volatile backdrop and tariff noise," KeyBanc Capital Markets analyst Bradley Thomas wrote in a note cited by Barron's.

Analysts will be closely watching how President Donald Trump's duties have affected the largest US retailer over the past three months, CNBC writes. In May, Walmart CFO John David Rainey said that higher duties could force the company to start raising prices. This led to harsh criticism from US President Donald Trump: he demanded that the world's largest retailer "swallow the duties" and not pass on the costs of imports to consumers. "I'll be watching and so will your customers!!!!" - Trump wrote on the social media network Truth Social.

The retailer in a previous report declined to give a forecast for earnings per share or operating profit growth in the second quarter, citing the changing tariff policy. Walmart has since begun raising prices on certain categories of merchandise, such as children's and home goods, in defiance of Trump's pressure.

"Perhaps even more important for Walmart and the broader retail sector will be comments regarding the company's pricing strategy (which we believe has been aggressive) as well as consumers' initial reactions to price changes (moderate elasticity is expected, but with a tendency to worsen)," Barclays analyst Seth Sigman wrote this week(quoted by CNBC). His rating on the stock is "Above Market" (overweight rating) with a target price of $108.

The analyst said he "wouldn't be surprised" if Walmart's forecast remains unchanged, even despite the "strong" second quarter he expects. "While there is potential to raise the full-year forecast based on the first half of the year, there are reasons not to do so right now," he said. - The actual implementation of duties remains in doubt for now due to deferrals, and it's too early in the process to estimate industry-wide price increases."

The most optimistic analysts concede that annualized forecasts will be raised, but Jefferies analyst Corey Tarlow, like Sigman, doubts that, Barron's writes.

Investors expect a lot from Walmart, and the stock price reflects that: it trades at 36 times projected earnings (P/E ratio), Barron's noted. That means the stock price is likely to fall if investors see weak results or management's financial forecasts, the publication warned.

- Analyst Oliver Chen of TD Cowen believes the stock has a 14% upside potential: his target price is $115. Chen recommends buying the securities. "Investor expectations suggest a continuation of first-quarter momentum with comparable sales growth in the U.S. of at least 4% versus 4.5% in the first quarter," CNBC quoted the analyst as saying. TD Cowen expects the retailer to exceed second-quarter guidance, but only to confirm its full-year forecast amid uncertainty in consumer sentiment and macroeconomics in the second half of the year.

- Analyst Robert Ooms at Bank of America expects Walmart shares to rise 19% over the next 12 months - to $120 - and recommends buying them (Buy rating). "We believe the company is well-prepared to manage the duty burden due to its scale, advanced pricing, automation, inventory management, ability to shift imports to third-party vendor channels, and lower import share compared to competitors," Oums said. He noted that despite price pressures, Walmart continues to grow market share across all product categories and income levels (especially the most affluent), and its attractive value for money combined with digital services is resonating with consumers. According to the analyst, the company's long-term profitability outlook is improving due to growth in digital advertising, marketplace development and reduced losses in e-commerce. "While Walmart's current P/E ratio (share price to projected annual earnings) of 34 is near 20+ year highs, we see potential for further expansion," BofA states.

- Analyst Simeon Gutman at Morgan Stanley thinks the retailer's securities will rise 14% and recommends buying them (Overweight rating). "While duties continue to add uncertainty to earnings forecasts for the second half of fiscal 2026, Walmart will likely be able to leverage its strengths to overcome these challenges thanks to a better supply chain, growing e-commerce reach, profitability growth, and alternative revenue sources with high margins," the analyst writes. Morgan Stanley notes "moderate potential" to exceed consensus estimates for the second quarter, but suggests that management will leave the full-year guidance unchanged given the uncertainty surrounding duties and necessary price increases in the second half of the year. "We don't think it will be taken negatively if key growth drivers - e-commerce, retail media advertising and Walmart+ subscriptions - maintain momentum. And we believe that is exactly what is happening," Gutman stated.

- Wells Fargo analyst Edward Kelly expects Walmart shares to rise 7% to $108 and recommends buying (Overweight valuation). "The second quarter looks more challenging than usual amid the lack of a concrete outlook and volatility related to inventory accounting and trade policy, but we anticipate the big picture to continue," the analyst writes. He expects Walmart to show market share gains (including more than 4% of comparable sales in the U.S.), margin improvement, and confirmation of its full-year guidance despite the uncertainty. That said, Kelly notes that more important in the report will be signals about consumer behavior and pricing strategy in the face of duties. "Both factors could increase investor caution on the retail sector in the second half of the year," emphasizes the analyst.

- Oppenheimer analyst Rupesh Parikh predicts the retailer's shares will rise 14% to $115 and advises them to buy (Outperform rating). "After a challenging start to the year amid unexpected duty pressure and rising costs, we believe an upward guidance cycle may soon begin. We expect solid revenue results close to the upper end of management's second quarter guidance (3.5-4.5% growth in comparable constant currencies)," CNBC quoted Parikh as saying. According to the analyst, the investment bank expects that the company's management may raise its outlook for fiscal 2025 (ending January 2026) either with the second-quarter report or later with the third-quarter report.

A total of 43 analysts have rated Walmart's stock and all but one recommend buying it, according to LSEG.

This article was AI-translated and verified by a human editor